Frontrunning: January 11
- WSJ picks up on excess "deposits over loans" theme, reaches wrong conclusion: Wads of Cash Squeeze Bank Margins (WSJ)
- SAC Is Bracing for Big Exodus of Funds (WSJ)
- Japan unveils Y10.3tn stimulus package (FT)
- China’s Inflation Accelerates as Chill Boosts Food Prices (BBG)
- Berlusconi Denies Responsibility for Italy Crisis (BBG)
- Fed hawks worry about threat of inflation (Reuters)
- And then the lunatics: Fed easing may not be aggressive enough: Kocherlakota (Reuters)
- BOJ Likely to Take Easing Steps (WSJ)
- Draghi Shifts Crisis Gear as ECB Focuses on Economy Inbox (BBG)
- Argentina Bondholders Lose Bid to Get State-Court Review (BBG)
- Regulators Find Major Euribor Shortcomings (WSJ)
- Basel III Punishes Dutch Over Risk That Isn’t (BBG)
- Bondholders in Crosshairs as Merkel Travels to Cyprus (BBG)
Overnight Media Digest
* U.S. Vice President Joe Biden said he would recommend the White House push for broad measures to stem gun violence, citing growing support for tighter background checks on gun purchasers, restrictions on high-capacity clips and other moves.
* Bank of America Corp has been fighting in a New York court this week to avoid as much as $3 billion in liability for defaulted Countrywide mortgage securities, but the bank's courtroom adversary, bond insurer MBIA Inc, is wielding the bank executives' own words in its attack.
* American Express Co set plans to cut 5,400 jobs in its biggest retrenchment in a decade as it pares back a travel business that has been hammered by the rise of Internet-based hotel- and airfare-reservation services.
* U.S. aviation regulators raised questions about the reliability of the Boeing Co 787 Dreamliner during long transocean flights months before the advanced new jet suffered a spate of electrical and other problems this week, according to people familiar with the matter.
* Investors led by Cerberus Capital Management LP, are buying Supervalu's Albertsons stores and four of its other chains including Chicago's Jewel-Osco and New England's Shaw's, for $100 million in equity and assuming $3.2 billion of debt.
* BATS Global Markets Inc rushed on Thursday to allay concerns of customers and regulators after announcing that errors on its exchange went undetected for four years, violating securities laws and allowing hundreds of thousands of bad trades to be executed.
* Nokia gave the first evidence that people are buying its newest smartphones, quelling investor concern that the Finnish giant's bet on Microsoft Corp's software was a strategic blunder.
* Inflation accelerated in China in December as unusually cold winter weather pushed up food prices around the country, potentially posing a risk to the recovery.
* Sony Corp is looking to sell one of its main buildings in Tokyo for roughly $1 billion to $1.5 billion, barely two years after it was completed, as the company accelerates shedding nonessential assets to raise cash, a person with knowledge of the proposed sale said.
BRUSSELS TAKES TOUGH STANCE ON GOOGLE Google must change the way it presents search results in Europe or face antitrust charges for "diverting traffic" to its own services, the European Union's competition chief said.
UPS MOVE ON TNT POSES CONCERN United Parcel Service's planned takeover of TNT Express poses serious competition problems that are "not easy" to resolve, the EU's competition chief said.
RBS EYES BONUS POT TO RECOUP LIBOR LOSSES Royal Bank of Scotland is considering recouping half of its imminent regulatory penalty for Libor abuses from the 2012 bonus pool of its investment bankers.
DECISION TO KEEP STATUS QUO ON RPI CHEERS BOND MARKETS The inflation-protected government bond market cheered an unexpected decision by the UK's national statistics body no to tamper with a key index used to measure price changes.
FORMER UBS BOSSES DENY LIBOR KNOWLEDGE Four former top executive at Swiss bank UBS have denied all knowledge of Libor manipulation during their tenures.
BOLLAND VOWS TO STAY ON AT M&S Marc Bolland has pledged to stay on as chief executive of Marks & Spencer in a year's time, despite facing growing pressure after poor Christmas clothing sales.
GENERALI TO OUTLINE PLANS FOR EMERGING MARKETS PUSH Italian insurer Generali will next week unveil plans to strengthen its focus on developing markets such as China and Latin America.
HOSTILE TAKEOVERS SLUMP TO DECADE LOW Hostile takeovers have fallen to a decade low globally in a sign of how lacklustre confidence among corporate leaders is reining in dealmaking.
* American Express said it would cut about 5,400 jobs, mainly in its travel business, as it seeks to cut costs and transform its operations while more of its customers shift to online portals for booking travel plans and other needs.
* The Japanese government approved emergency stimulus spending of more than $100 billion on Friday, part of an aggressive push by Prime Minister Shinzo Abe to kick-start growth in Japan's long-moribund economy.
* An investor group led by Cerberus Capital Management agreed to buy a number of grocery chains from Supervalu , including Albertsons, for about $3.3 billion.
* Hedge fund Citadel posted returns of about 25 percent in its main investment funds, known as Kensington and Wellington, the firm wrote to investors in letters sent on Thursday.
* Sales of Nokia's new smartphone line, the Lumia, powered by Microsoft's Windows Phone operating system, soared more than 50 percent in the fourth quarter of last year, according to preliminary financial information.
* Several former senior executives at UBS were labeled negligent and incompetent on Thursday for failing to detect illegal activity that caused the Swiss bank to pay a $1.5 billion fine to global regulators.
* A California federal judge has delayed the sentencing of Philip Horn, a Wells Fargo broker who pleaded guilty to defrauding more than a dozen clients.
* Two large egg producers have received warning letters from the U.S. Food and Drug Administration, which said they violated a two-year-old rule aimed at preventing salmonella contamination.
CHINA SECURITIES JOURNAL
--As of November 2012, investment in Chinese wealth management products had reached 761 million yuan, the China Banking Regulatory Commission said.
--Tang Shuangning, chairman of China Everbright group, said his company planned to let its subsidiary company, Everbright Financial Holding Asset Management Co., Ltd, list on the domestic stock market within five years.
SHANGHAI SECURITIES NEWS
--Income from tourism is expected to hit 2.85 trillion yuan in 2013, up 11 percent year on year. The National Tourism Administration Board is planning to promote the implementation of paid leave at Chinese companies to encourage the consumption of tourism services.
CHINA DAILY (www.chinadaily.com.cn)
--Authorities are investigating an industry that has grown around the creation and sale of fake blood donation certificates that allow bearers to receive free transfusions.
--An editorial warned that cuts in overall U.S. defence spending should be considered in the context of increased U.S. spending on precision-strike non-nuclear weapons that can deliver warheads anywhere on the planet within an hour. It called for the system to be made part of strategic arms reduction talks.
--Lenovo will release a new large table-top tablet PC that can be touched by up to ten fingers at a time. It is intended for use at family functions, addressing concerns by Chinese family heads that their family members are spending too much time playing with individual cellphones during dinner.
--As of the end of 2012, China had 953 state-owned companies listed on Chinese stock exchanges, with a net market value of 1.37 trillion yuan ($220.10 billion), said Wang Yong, director of the State-owned Assets Supervision and Administration Commission of the State Council.
THE GLOBE AND MAIL
* As elementary teachers prepare to walk off the job on Friday, a hearing into whether they are staging an illegal strike continued late into the night. The Ontario government asked the Ontario Labour Relations Board to declare that the one day protest by teachers is an illegal strike.
* Talks between Prime Minister Stephen Harper and First Nations leaders will go on without the participation of many of the invited chiefs after a day of chaotic negotiations that has further eroded an already fragile relationship.
Reports in the business section:
* Canada's central bank, Bank of Canada, looking past surprisingly strong job growth at the end of 2012, is downgrading its short-term outlook for the economy as exports continue to languish.
* Kinder Morgan Canada is thrusting oil sands producers into the spotlight as it makes the case for a much larger pipeline to carry Alberta oil to British Columbia Lower Mainland for export.
* Toronto district school board Director Chris Spence resigned on Thursday after evidence suggested that he is a serial plagiarist, and as more investigation finds yet further evidence of copied material in his public writings.
* A computer glitch froze air traffic control capabilities at Toronto Pearson on Thursday, prompting flight delays and some cancellations across Canada.
* Bombardier Inc said it is confident that it will defend its turf against the new re-engined regional jet from Brazilian rival Embraer SA.
* The Canadian investment industry's self-regulatory organization has found that the process for setting Canadian Dealer Offered Rate (Cdor), the Canadian version of Libor, is murky, complex and could be manipulated, but stopped short of making concrete recommendations on how to fix it.
Fly On The Wall 7:00 AM Market Snapshot
Brookdale Senior Living (BKD) upgraded to Buy from Neutral at BofA/Merrill
CenterPoint Energy (CNP) upgraded to Outperform from Sector Perform at RBC Capital
Community Health (CYH) upgraded to Buy from Neutral at BofA/Merrill
Dendreon (DNDN) upgraded to Outperform from Market Perform at Bernstein
Edison International (EIX) upgraded to Buy from Neutral at Goldman
Forest Labs (FRX) upgraded to Neutral from Sell at Goldman
Mindray Medical (MR) upgraded to Buy from Neutral at Goldman
NRG Energy (NRG) upgraded to Conviction Buy from Buy at Goldman
Oasis Petroleum (OAS) upgraded to Outperform from Market Perform at Wells Fargo
Philip Morris (PM) upgraded to Conviction Buy from Buy at Goldman
Tenet Healthcare (THC) upgraded to Buy from Neutral at BofA/Merrill
Wisconsin Energy (WEC) upgraded to Neutral from Sell at Goldman
3M Company (MMM) downgraded to Underweight from Neutral at JPMorgan
Aeropostale (ARO) downgraded to Neutral from Overweight at Piper Jaffray
Bazaarvoice (BV) downgraded to Market Perform from Outperform at BMO Capital
Calpine (CPN) downgraded to Buy from Conviction Buy at Goldman
Campbell Soup (CPB) downgraded to Buy from Conviction Buy at Goldman
Century Aluminum (CENX) downgraded to Sell from Fair Value at CRT Capital
Corning (GLW) downgraded to Neutral from Buy at Goldman
Cummins (CMI) downgraded to Hold from Buy at Jefferies
Dr Pepper Snapple (DPS) downgraded to Market Perform from Outperform at Bernstein
Electronic Arts (EA) downgraded to Neutral from Overweight at Piper Jaffray
FirstEnergy (FE) downgraded to Sell from Neutral at Goldman
General Mills (GIS) downgraded to Sell from Neutral at Goldman
J.M. Smucker (SJM) downgraded to Neutral from Buy at Goldman
Perrigo (PRGO) downgraded to Sell from Neutral at Goldman
Quiksilver (ZQK) downgraded to Neutral from Overweight at Piper Jaffray
Research in Motion (RIMM) downgraded to Underperform at BMO Capital
Watson Pharmaceuticals (WPI) downgraded to Neutral from Buy at Goldman
AIG (AIG) initiated with an Outperform at FBR Capital
AOL (AOL) initiated with a Hold at Cantor
comScore (SCOR) initiated with a Hold at Cantor
D.R. Horton (DHI) initiated with a Buy at BofA/Merrill
GATX Corp. (GMT) initiated with a Buy at Stifel Nicolaus
Masco (MAS) initiated with a Buy at BofA/Merrill
Molson Coors (TAP) initiated with a Buy at Nomura
Montpelier Re (MRH) initiated with a Market Perform at JMP Securities
Owens Corning (OC) initiated with a Buy at BofA/Merrill
Salix (SLXP) initiated with an Outperform at RBC Capital
Shutterstock (SSTK) initiated with a Buy at Cantor
Southwest Bancorp (OKSB) initiated with a Buy at DA Davidson
American Express (AXP) to cut 5,400 jobs, to cut staffing 4%-6% by end of 2013
Said largest job cuts to come in travel businesses
Boeing (BA) Dreamliner power system focus of special FAA review, Bloomberg reports
Ford (F) to hire 2,200 salaried workers in U.S.
Costco (COST), Teamsters Union reached tentative agreement
SYNNEX (SNX) sees new M&A opportunities in 2013 and beyond
J&J (JNJ) announced FDA committee recommended approval of diabetes treatment
Companies that beat consensus earnings expectations last night and today include:
Infosys (INFY), American Express (AXP), Xyratex (XRTX), Ceres (CERE), SYNNEX (SNX)
U.S. banks are struggling with a flood of deposits when many lenders are having difficulty making new loans, spelling trouble for the industry as banks prepare to post Q4 numbers, the Wall Street Journal reports
New rules meant to simplify and standardize consumer home loans could create problems for homebuilders and real estate brokers, which say the rules will hurt their in-house mortgage services operations, the Wall Street Journal reports
Two top Fed policymakers expressed discomfort with the U.S. central bank's easy monetary policy, in comments suggesting Fed Chairman Ben Bernanke may face more dissent this year. Kansas City Fed President Esther George warned that the Fed's near-zero interest-rate policy could spark inflation, as did St. Louis Fed President James Bullard, Reuters reports
A Delaware judge refused to fast-track a shareholder class action lawsuit seeking to block Sprint Nextel’s (S) deal to buy Clearwire (CLWR), said Crest Financial Ltd, Clearwire's largest shareholder after Sprint, Reuters reports
The FBI’s Washington field office has taken a central role in the U.S. probe of the manipulation of interest rates that has entangled banks around the world, such as the U.S. investigation into the rigging of benchmarks including the London Interbank Offered Rate, Bloomberg reports
Charoen Pokphand Group Co. said it has the resources to complete a planned purchase of a $9.4B stake in China’s Pin An Insurance (Group) Co., Bloomberg reports
Aegerion (AEGR) files to sell common stock
Colony Financial (CLNY) to offer 5M shares of common stock
ONEOK Partners (OKS) files to sell $300M in common units
S&W Seed (SANW) files to sell common stock